Remember when you could walk into a pharmacy and buy a decongestant like Sudafed? The key ingredient was pseudoephedrine, a precursor to methamphetamine. A series of laws made it more and more difficult to buy or manufacture pseudoephedrine (despite it's legality). So what did we get for our loss of liberty? A new paper (AEA) (free here) in the March AER says not much:
In mid-1995, a government effort to reduce the supply of methamphetamine precursors successfully disrupted the methamphetamine market and interrupted a trajectory of increasing usage. The price of methamphetamine tripled and purity declined from 90 percent to 20 percent. Simultaneously, amphetamine related hospital and treatment admissions dropped 50 percent and 35 percent, respectively. Methamphetamine use among arrestees declined 55 percent. Although felony methamphetamine arrests fell 50 percent, there is no evidence of substantial reductions in property or violent crime. The impact was largely temporary. The price returned to its original level within four months; purity, hospital admissions, treatment admissions, and arrests approached preintervention levels within eighteen months.
The authors conclude:
This is quite possibly the DEA’s greatest success in disrupting the supply of a
major illicit substance. The focus on disrupting the supply of inputs rather than of the drug itself proved extremely successful. This success was the result of a highly
concentrated input supply market and consequently may be difficult to replicate for drugs
with less centralized sources of supply, such as cocaine and heroin. That this massive
market disruption resulted in only a temporary reduction in adverse health events and
drug arrests and did not reduce property and violent crimes, is disappointing. (italics added)
FYI, this paper makes its case almost entirely by carefully laying out the data rather than with theory or econometrics–that was nice to see in the AER.